Golden Goose’s US$2,000 sneakers are a rare win for private equity
As mega brands such as Gucci focus on the 1%, they leave the entry level designer products market to the Italian brand
[LONDON] Golden Goose is an Italian maker of distressed-looking sneakers that can set you back US$2,000 for a crystal-studded pair.
The company said on Friday (Dec 19) that Chinese private equity firm HSG, formerly known as Sequoia Capital China, had become its majority shareholder after buying a stake from current owner Permira.
Singapore’s investment firm Temasek, alongside its subsidiary True Light, has also bought a minority stake in the Venice-based maker of sneakers that retail starting at 500 euros (S$756.24) a pair. The accord gives Golden Goose a valuation of around 2.5 billion euros ($3 billion) including debt, a source close to the matter said. The statement did not disclose financial details.
The transaction – twice the size of Prada’s purchase of Versace earlier this year – also comes at a time of depressed demand for luxury goods.
The valuation may be less extravagant than what was mooted in an abandoned initial public offering (IPO) 18 months ago, but the PE firm has roughly doubled the company’s value in five years.
It acquired most of Golden Goose from Carlyle for 1.3 billion euros in 2020. Investors balked at a three billion euros enterprise value in that doomed Milan IPO effort last year, pointing to the troubles of Dr Martens, another footwear company previously owned by Permira.
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A slowing market for top-end goods did not help after three years of blockbuster growth.
And yet, the worst luxury downturn since the financial crisis, excluding the pandemic, has been good for Golden Goose. As comfortably off but not super-rich consumers reined in their spending, mega brands such as Louis Vuitton and Gucci went upmarket to follow the money.
As they concentrated on the 1 per cent, they abandoned entry level products such as designer sneakers, leaving that market to Golden Goose.
They also raised prices on shoes, handbags and other core goods. The average cost of a basket of iconic luxury items in Europe rose by 54 per cent between 2019 and the end of 2024, said analysts at HSBC.
In comparison, Golden Goose has lifted prices by just 4 per cent over the past five years. That makes its sneakers, hardly a snip at an average price of 550 euros including customisation, look better value for money.
The company increased sales from 266 million euros in 2020 to 655 million euros in 2024. Growth has continued this year, with sales up 13 per cent in the first nine months, and earnings before interest, tax, depreciation and amortisation (Ebitda) up 7 per cent.
Assuming similar momentum for the full year and a stable Ebitda margin, Golden Goose could generate about 740 million euros of sales in 2025 and close to 250 euros million of Ebitda.
The price equates to about 10 times Ebitda, a discount to Moncler’s 13 times and Birkenstock’s 11 times, but still at least a doubling of Permira’s equity value. The firm will stay as a minority investor.
HSG previously backed Labubu-maker Pop Mart, TikTok owner ByteDance and Chinese social media platform Red Note, so expansion will likely be focused on Asia.
Golden Goose makes only 12 per cent of its sales in the region, with just 7 per cent in China, far less than most luxury brands. About half its sales are in the Americas, the rest in Europe and the Middle East.
There is clearly more to go for in China. With Gucci handbags and Chanel pumps no longer so prized, there is an appetite for quirky items that connect emotionally with young shoppers.
Take Crocs’ clogs, which can be customised with charms. They have become a hit with the country’s Generation Z consumers. This bodes well for Golden Goose.
Sneakers account for 90 per cent of the company’s sales, so there is room to diversify.
Bags and clothing, which can also be personalised, are other opportunities in the US as well as China. Temasek’s experience as an investor in Stone Island, Ermenegildo Zegna and Moncler chairman Remo Ruffini’s holding company should help.
Ex-Gucci boss Marco Bizzarri will become chairman.
But hitting Golden Goose’s long-term target of lifting yearly sales to one billion euros will not be easy.
Although there are hopes that China’s luxury market is past the worst, any recovery will take time. And consumers there are more focused on sneakers that help them run faster or tackle more challenging hikes.
Nike said recently that it was seen more as a casual fashion shoe brand, rather than a performance one, holding back sales and forcing it to discount prices.
Meanwhile, big luxury has decided it wants its middle-class customers back. Sneakers and similar goods will be key, bringing more competition.
If Golden Goose can successfully expand in China and become a broader lifestyle brand like Ralph Lauren, its future will be far from scruffy. But given the travails of PE owners over the past couple of years, it is not a bad time to take some money off the table. BLOOMBERG, REUTERS
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